The July jobs report just hit the tape and I have to say, it came in “hot.” The details are as follows:
* Nonfarm payrolls fell by 247,000 last month, much smaller than the average forecast for a reading of -325,000. June’s number was revised down to -443,000 from -467,000 and May’s reading was revised down to 303,000 from 322,000.
* By industry, manufacturing lost 52,000 jobs (compared to -131,000 a month earlier), construction lost 76,000 (vs. -86,000), retail trade lost 44,000 (vs. -21,000), and trade/transport lost 87,000 (vs. -45,000). The biggest job gains were in education/health (+17,000), leisure and hospitality (+9,000) and government (+7,000).
* The unemployment rate surprised as well. It dropped to 9.4% from 9.5% in the prior month. Economists were expecting it to increase to 9.6% instead.
* Average hourly earnings climbed 0.2%, an improvement from the unchanged reading in June. That was also better than the forecast for 0.1%. Average weekly hours ticked up to 33.1 from 33. Lastly, the diffusion index improved to 30.1 from 28.6. That means fewer industries overall are shedding jobs.
Interest rates are flying on this news, with the 10-year yield rising as high as 3.88%. The long bond futures are down about 1 5/32 as I write.
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It came in hot? We are still bleeding jobs. We are still not creating any jobs, and the only jobs being created are low wage jobs. I don’t believe that average hourly wages increased either, not from what I’m seeing out there. It’s an employer’s market, and they know it. There are still highly qualified people out of jobs. The jobs numbers have either been manipulated by the government or the drop in unemployment is a result of people giving up or having run out of unemployment benefits, so they are no longer being counted. I wouldn’t call it hot by any stretch of the imagination. I see so many degreed, experienced people taking low level jobs, working temporary jobs, working survival jobs. Sure, lots of call centers (especially banks) are hiring loads of temporary workers at low wages to handle loan mods. Those are the kinds of jobs being created, and they won’t last.